Advocacy group Consumer Watchdog set out to take on health insurers in California with a ballot initiative to regulate rates, but it may face ramped-up opposition from the personal lines sector as well. The initiative's formal language conflicts with another proposition, already cleared for the Nov. 6 general election ballot, to allow for discounts when drivers switch auto insurers.

The proposed initiative, now in the signature-gathering phase, would empower the insurance commissioner to approve all rate filings in order for them to go into effect. It would subject health plans in the individual and small group markets to the same rules that home and auto insurance companies must follow under 1988's Proposition 103, including public notice, disclosure and hearings on rate changes. Employer large group health plans would be excluded.

The Consumer Watchdog initiative includes the phrase, "Prohibits health, auto and homeowners insurers from determining policy eligibility or rates based on lack of prior coverage or credit history." That both recalls the language of Proposition 103 and puts the measure aimed at health insurers in direct contradiction with a proposition that would allow drivers to be eligible for longevity discounts even if they switch insurers — which is now illegal under Proposition 103.

Property and casualty companies are now "very likely" to bring their ammunition to the campaign to block the health insurance initiative, said Mark Sektnan, president of the Association of California Insurance Companies. "I would imagine the property/casualty industry, which would not have gotten involved in a pure health insurance initiative, will also get involved," he told SNL.

Consumer Watchdog leaders also led the successful campaign to defeat a substantially similar June 2010 auto insurance ballot measure that Mercury General Corp. and its affiliates spent more than $16 million to promote. Opponents said the effect would have been discriminatory higher rates for those with any gap in their auto coverage, including the poor and members of the armed forces who frequently move. They used the slogan, "When was the last time an insurance company spent millions to save you money?"

Mercury General Chairman and former CEO George Joseph has already spent $8.1 million on behalf of this year's version, according to state campaign finance records. The current question includes language aimed at applying the discounts to those in the military.

Consumer Watchdog's initiative language gives the advocacy group a way to take on two foes, Sektnan said. "It's just another opportunity to take a shot at George Joseph in their ongoing war over persistence," he said.

If both ballot initiatives pass, the one getting the larger number of "yes" votes becomes law, according to the California Secretary of State's office.

The ballot language is intended to evoke Proposition 103 in substance as well as style, said Carmen Balber, Washington director for Consumer Watchdog.

The petition is just one page and the campaign is deliberately all-volunteer, bypassing the signature-gathering industry that has gained a prominent role in California campaigns. Awakening the ire of insurance sectors other than health is not a major concern, she told SNL.

"We're well aware we will draw the fire of the insurance industry," Balber said.

The group has backed a measure, A.B. 52, aimed at regulating health insurance rates, but the legislation has yet to pass both houses of the legislature. The bill does not include the language about home and auto insurance. "There is a good reason why we're finally at the ballot," Balber said. "Every single year, the health insurance industry pushes it down."

The initiative process is a whole different world, Balber said. "This is an issue that has broad appeal — bipartisan, across demographics, across age, across race. It polls in the 70s or 80s," she said.

The advocacy group has not made public its latest polling from late 2011. It cited a 2008 poll that showed 71% of respondents in favor of requiring health insurers to justify premium increases and get approval for rate hikes.

In order to get on the November ballot, Consumer Watchdog must collect 504,760 valid signatures from registered voters, a number equal to 5% of the total votes cast for governor in 2010. It has until June 4 to turn in its petitions.

Opponents in the health sector are mobilizing against the initiative. The California Medical Association and the California Hospital Association announced their opposition this month, saying it fails to address the underlying reasons for increasing medical costs. "It creates more government bureaucracy and intrusive regulatory controls over people's health," CHA President and CEO C. Duane Dauner said in a statement.

Health insurers including Blue Shield of California and WellPoint Inc.'s Anthem Blue Cross L&H Insurance Co. referred questions to a statewide trade association, the California Association of Health Plans, which did not respond to inquiries.

Insurance Commissioner Dave Jones has backed A.B. 52, and sponsored a similar bill when he was in the state Assembly in 2010. So far, however, he has not taken an official position on the proposed initiative, insurance department spokeswoman Pat McConahay told SNL.